Distinction for social, fiscal and technical purposes between mortgage and loan
Always with a view to a correct introduction to the world of the credit market, we must elucidate the difference between a mortgage and an online loan. Learning this distinction may prove useful to those who want a loan but don’t know what to do: mortgage or loan ? Let’s say that the differences between mortgages and loans are many. However, all the various differences rest on the main one: the social purpose. Specified this, we illustrate a list with every single difference between mortgage and loan.
Difference between mortgage and loan
A) As mentioned above, the main difference from which the others derive is the social and economic function that the mortgage has with respect to the loan: the first has the purpose of making us acquire mainly the first home (and real estate in general), purpose, this, which has a great social importance; loans, in particular personal loans (but also others), have a purely consumerist purpose, it being understood that in some cases they are used for serious reasons. This is the real difference between mortgage and loan to which we will see all the others adapt.
B) The tax distinction between mortgages and loans follows. In fact, given the purpose referred to in letter “A”, only the mortgage is granted the benefit of being able to discharge interest expense from its taxes. While the loan does not have any tax relief due to the different function it has in our society, in particular the tax relief of the first home loan.
C) Another difference between loan and mortgage: the repayment term. The ten-year term is the maximum duration in the loan sector, while for a mortgage 10 years represent the minimum duration: you think that, under certain conditions, the repayment of a mortgage has gone up to 50 years! And that in Italy the average is 25 years.
D) Differences again: the mortgage always consists of a precise real guarantee (in addition to the personal one), that is, the mortgages turned on on the asset, while in the loan only proof of income is required. All this is reflected in the ancillary costs of mortgages and loans because the former are particularly high when compared to the latter.
E) Finally, “there was” a distinction or difference between mortgage and loan, that is, the one falling on the amount of the sums disbursed. Let’s talk about the past because today the technique of the Italian financial market has adapted to the European one in the sense that through the personal loan (see personal loan) it is possible to disburse even up to 100 thousand dollars. In this case we can say that this last difference between mortgage and loan is getting thinner and who knows if one day it will disappear completely.